Seminar-ICommon Service Centre (Internet connected service delivery kiosk): Unlocking

the Potential of Rural India

Mentor: Prof. Dr. Peter Stanovnik Author: Satya Prakash Patel

Growth India Story :Facts and Figure

5000year old civilization and incredible history and culture. Having 18 official languages and 325 spoken languages.

28States and 7 union territory,6,38,596 villages India’s Population=1.2 Billion and --700 million working population 2020 worlds largest

working force to take demographic dividend to achieve continuous growth of country. World largest dynamic democracy and honest election system

4th largest economy of the world and become 3rd largest economy of the world after USA and China by 2012 and GDP growth rate 8%to 9%.

55%share in worlds IT-BPO Industry(World IT-BPO industry=1.6trillion USD) Worlds largest English speaking population=300million in 2010 Explosion of middle class in India 368million(32% of total population) in 2010 -main driver

of Indian economy. India has a vibrant private sector and market led economic growth not the state induced growth 706 million telephone user(fixed phone-36million+670 million mobile phone) till September

2010 in India Internet user in India 81 million till September 2010 in India. Among it 10.3 millions are broad

band internet user.

Contrast and divide between Urban India vs Rural India

Divide Parameter Urban India

Rural India

Industrial+ services vs. Agriculture

Employment(Industry + service vs. Agriculture)

50% 50%

Urban-Rural Location(cities + towns vs. villages)

30% 70%

Rich-Poor Income(Middle class vs. Lower class+ poor)

10% 90%

Metro cities vs. Non Metro cities

Location(Metros cities vs. cities + towns + villages)

7% 93%

Mindset world view Income + location(Middle class and metro vs. lower class, poor + cities, town & villages)

2% 98%

Digital Divide Tele density 134% 27%

Broad band penetration 95% 5%

Rationale for Internet connected service delivery kiosk(CSC) in rural India

To bridge the urban and rural developmental and digital divide in India

Enhancing empowerment to rural people through access to government information/public services(e-governance) at their door step.

Reduce the poverty in rural area through : (i)increasing job opportunity, (ii)enhancing empowerment, (iii) improving financial security. Opportunity makes markets work for the poor and expands poor people’s assets. Empowerment makes state institutions work better for poor people and removes social barriers. Security helps poor people manage risk.

New access to knowledge ,information and education in the remotest part of India. Village knowledge center will integrate with world knowledge economy through IT-BPO services.

Achieve an inclusive growth in India to include the large proportion of underprivileged section of society into growth process .The ultimate goal is to improve the economic condition and improve the living standard of rural people to fuel the growth of India .

Service Need Matrix for Rural India

Service Need Matrix for Rural India

National e Governance Plan(NeGP) of India and Common Service Center(CSC)

Approved by the Union Cabinet in May, 2006- The NeGP, comprising of 27 Mission Mode Projects (MMPs)and 8 components----Vision of NeGP-“Make all Government services accessible to the COMMON MAN IN HIS LOCALITY, through Common Service Delivery Outlets and ensure EFFICIENCY, TRANSPARENCY & RELIABILITY of such services at AFFORDABLE COSTS to realize the BASIC NEEDS of the common man.

CSC is one of the main integrated mission mode projects of national e governance plan (NeGP) of India.

The objective is to develop a platform that can enable government, private and social sector organizations to align their social and commercial goals for the benefit of the rural population in the remotest corners of country through a combination of IT-based as well as non-IT-based services

The goal of the CSC Project is to empower the rural community and catalyse social change through modern technologies.

The Government has approved a Common Services Centres (CSCs) Scheme for providing support for establishing 100,000 Common Services Centers in 600,000villages of India on “honey –comb model” i.e. each CSC will cover six villages

CSC scheme comprises –technological, organizational and service framework. ‘The CSCs are envisaged to provide high quality and cost effective video and data services in the areas of e-governance, education, health, agriculture, entertainment as well as other private services .

Mission Mode Projects (MMPs) of India’s NeGP: Scope of Output

 Services

 Central

 State

 Integrated 

Services to Citizens (G2C) 

Income Tax Passport, Visa Immigration E-Posts 

Land records Property registration Road transport Agriculture Municipalities Panchayats Police Employment Exchange Education Health Food Distribution &

other welfare programs 

Common Services Centers (CSC),

State Wide Area Network (SWAN): fiber optic connectivity up to block level,

Countrywide State Data

Centers(SDC), All India Portal National E-

Governance Gateway

 Services to Business (G2B)  

Excise Company affairs 

Commercial Taxes 

-EDI-Custom &foreign trade

-E-Biz -E-Procurement

Other 

National ID, National GIS for

planning 

Treasuries 

E-Courts 

Technological framework of CSC

Technological framework of CSCs is based on the core infrastructure of National e Networks (SWANs), State Data Centres (SDCs) and Common Services Centers (CSCs)

All services supported by 3 infrastructure pillars to facilitate web-enabled Anytime, Anywhere access-(i)Connectivity: State Wide Area Networks (SWANs)/NICNET; (ii) National Data Bank/ State Data Centres ( SDCs); (iii)Common Service Centres (CSCs): primary mode of deliver.

There is a National Data Center (NICNET) which is connected to all government department and agencies of central and state government of India to their respective state data centers(SDC).

Main role of SDC are securing and hosting of data and its application Its be to act as the- Central repository of the State, provide secure data storage, disaster recovery and remote management functions etc.

State Wide Area Network(SWAN) is serving government to government (G2G) services and government to citizen services(G2C), especially for various mission mode projects(MMPs) like CSC.

CSCs are broad band enable service provider kiosk having at least following technical infrastructure-two P.C.s/laptop ,two printer ,web/digital camera, wireless connectivity ,UPS/invertor/ generator.

Technological framework of CSC

Organisational Framework of CSC

The CSC scheme is being coordinated by a National Level Service agency (NLSA) appointed by Department of Information Technology, Government of India( DIT), which oversees a 3-tier implementation framework-

(i) The framework consists of State designated agencies (SDAs)--to facilitate implementation of the Scheme within the State and to provide requisite policy, content and other support to the SCAs

(ii) Service centre agencies (SCAs) at the second/middle level (‘franchiser’, for one or more districts) - It operate, manage and build the village level network of CSCs and business. They are the prime driver of this scheme.

(iii) At the third level there are the local Village Level Entrepreneur (VLE-loosely analogous to a franchise),to deliver the service to the rural consumers in a cluster of six 6 villages. VLEs are selected by SCAs.

Implementation Status Of CSC- As on 28th February 2011, a total of 90,018 CSCs have been rolled out in thirty one States/UTs. 100% CSCs have been rolled out in 11 (Eleven) States (Chandigarh, Delhi, Goa, Gujarat, Haryana, Jharkhand, Kerala, Manipur, Puducherry, Sikkim & Tripura). More than 70% of the rollout has been completed in 12 (Twelve) States .It is expected that the roll out of 100,000 CSCs would be completed by March 2011 .

Service Framework of CSCs

The Common Services Centers (CSC) are proposed to be the delivery points for Government, Private and Social Sector services to rural citizens of India at their doorstep . The CSC Scheme is envisaged to be a bottom-up model for delivery of content, services, information and knowledge on Private Public Partnership (PPP)Model.

End-to-end Services: The key driver for the selection of content and services would be their end-to-end applicability. This means that a specific content/ service should be in a marketable format for it to be selected as a part of the service network in the CSCs. Broadly, the services selection would be on their ability to impact the consumer through the saving cost, helping income generation and enabling socio –economic generation.

Services offered by CSCs

Government (G2C) Services--Land records, Registration of vehicles, Issue of certificates,

Government schemes ,Ration cards, Electoral services ,Pension schemes, Road transport ,Public grievance, Utility/ Telephone Bills. e-Government Services-Market Linkages, Education, Healthcare, Agricultural ,Extension etc. ,Data collection ,Rural BPOs.

Business to Consumer (B2C) services (i) Commercial Services-Digital photos, web

surfing, photocopy, DTP, e-mail/chats ,CD burning, typing, printing, games, forms downloads/ estimates ,utility/telephone bills (private enterprises).(ii) Perspective e-Commerce/Online Services –Railway tickets, astrology, matrimonial, shopping, resume. (iii) Prospective Education Services-IT education, English skills training, tuitions.(iv) Prospective Entertainment-DTH, community TV.(v) Prospective Telemedicine- Primary healthcare. (vi) Prospective Agriculture Services-Agriculture-inputs, agriculture –loans, agriculture -consulting and training

Business services (B2B)---Advertising & promotion services, marketing ,promotions, data collection services, research data collect ,data entry, distribution services ,FMCG products, financial services ,loans/deposits ,referrals ,insurance etc.

Service Ecosystem of CSC

Opportunity Space for CSC and Potential of Rural India

These services empowering the rural people and bring transparency and accountability in government functioning, creating new job and enhancing their income. It provide new access to education, knowledge, micro- financing, agriculture extension and health Services. These services catalyse the social change and social development. It also provide new distribution channel for products and service in rural area, this market linkage opens new economic opportunity in rural India

ANC –ORG MARG Survey report 2006 states that a conservative estimate of the total expenditure that a household could spend on CSC offered different services will be 6.75% of a mean monthly expenditure of Rs.4739

Sahaj Srei Sahaj e-Village pvt. ltd( a SCA) estimated in 2008 that a rural Indian citizen spend Rs.639 per month on CSCs offered services. Average population in the catchment area of one CSC is 8159 on the basis of population of India in 2007(total population of India=1.2 billion and rural population=815million estimated). So total opportunity per CSC per month is around Rs. 52,13,000(5.2 million rupees.) hence the total opportunity available for 100,000 CSCs in country is around Rs.5213 billion(869 billion Euro).Presently on an average only 5%to 10% opportunity is tapped by one CSC.

Analysis of CSC offered Services

e-Government service offered by CSCs have their significance that they helps CSCs to recognise in rural community as an authenticated service provider .These service provide assured source of income to CSCs.

These four government services provides Rs.4894 per month to each CSC, while govt. of U.P. proposed to include 35 government services in the basket of CSC . This indicates the financial viability of CSC.

Tehsil-

Anoopshahar(U.P.)-

India(consist=140vil

lages) and 18 CSC

Name of e Government Services Number of User in year 2010

(01-01-2010 to31-12-2010)

1- Land Records(Khatuni: Records of Right) 32,440

2- Residence/Domicile certificate 3,304

3- Caste Certificate 8,761

4- Income Certificate 16,468

Total   60,973

Top 80% Revenue Generating Services of CSC

Services Annual Revenue for 100 household size villages (Rs.)

Basic Computer Training 9491Telemedicine 2955Vocational education 2171Land Records 1955Application for New Passports/Change of name, address 1687All tuitions 1563Ticketing – Rail/Road/Air 1225Agricultural consultancy & marketing facilities to the farmers for their produce 1167Entertainment – movies 1112Certificates available outside GP (Residency/caste/income/marriage/power of attorney/unemployment/disability certificate) 1105Grievances 1066Payment of all bills 992

Analysis of B2C services and B2B Services offered by CSC

CSCs have a potential to become the gateway for tapping the rural market by companies offering different product and services. CSCs opening new distribution channel for product and services.

Indicus Analysis Pvt. Ltd., New Delhi market survey report 2008-09 - despite of economic slowdown the market of personal care and home care product was bulking trend because these companies have discovered rural markets, which now contribute a little more than half the total sale for such product in country.

CSC empowers the rural people through government service and save their money and time .It creates new jobs and a helps in poverty reduction. It also offers new access to financial, agricultural and health related services as well as new knowledge, information and education.

The average number of professionals emerged as 60 youths in sample villages of Uttar Pradesh(India). Of those who attained some professional education, 38% were employed as professionals and 7% were service (govt., private or tuitions). However, 32% such professionally qualified were still engaged in cultivation or in some kind of labour work.”--[ANC-ORG MARG Survey]

These 32%professional educated youth can enhance their skill through CSCs offered vocational education , computer education and English speaking course and can be engaged in IT-BPO industry. These IT educated youth become a prime driver of emerging rural economy of India.

Challenges and Issues before CSC scheme

Despite of this remarkable progress, CSC scheme is facing some major challenges in the following field --

Delay in deployment of G2C services

Lack of Entrepreneurship in VLEs

Lack of capacity building effort

Inconsistent Connectivity and Electricity

Inadequate content in regional languages

Lack of Awareness about ICT and CSC Scheme

Minor challenges that are equally affecting the rollout progress of CSC scheme and its sustainability e.g. suitable place selection for CSC, appropriate population in the catchment area of an CSC, inappropriate monitoring system for VLEs, lack of credibility of VLEs in local rural community due to inconsistent service delivery, maintenance of computers in remote area etc.

Strategic Assessment of CSC project : SWOT Analysis of CSC

Strength-1-Exclusive right to deliver G2C services to rural people.2-G2Cservices make CSCs credible and unique position in rural community(strong brand name)3-2Mbps internet connectivity to CSCs through SWAN.4-Location of CSC in the heart of rural community5- CSC delivering G2C, B2C and B2B service at their door step to rural people.6-Public –Private Partnership model (PPP) for augmentation of CSC scheme.

Weakness-1-dealy in roll out in G2C services.2-Lack of content in local languages in case of G2C and B2C services.3-Dealy in SWAN roll out and its maintenance.4-lack of entrepreneurship in VLEs and poor capacity building efforts.5-Poor quality of services less credibility in local community.6-Poor infrastructure of CSC and their connectivity in rural area.7-Inadequate support of government and road blocking attitude of government functionaries.

Opportunity-1-Every rural Indian spent Rs.639/month on CSC offered services and population under one CSC is 8159. So opportunity under 100,000 CSC in an month is Rs.5213 billion.2-CSC open new distribution channel for product and services of private companies.3-Access to rural market of India through CSC to harness its potential.4-CSC offer access to education, information and knowledge to rural India. Space for IT and English education in rural area and harness the cyber labour in cheap competitive IT/ITes market by companies.5-CSC offers citizen centric government-citizen interface and empower the rural people.6-CSC creates1,00,000 direct job and 3,00,000 indirect job in rural India and catalyse the social change and inclusive growth in rural India.

Threat-1- competition to other B2C and B2B Service provider in the market. 2-CSCs are in Tax net while their competitor is not in the tax net.3-Threat from the mediatory and road blocking attitude of non motivated government functionaries.4-Low education, poverty and slow adoption rate towards ICT.5-Unwillingness and poor participation of private sectors and NGOs in this ambitious scheme.6-Lack of awareness about ICT and CSC scheme among rural community, government functionaries. 

Framework for analysing a Business Model of CSC

Sustainability and financial viability of CSCs depends on business model of CSCs and their execution. Business model is architecture for generating revenue and profit. It is an abstract and summary of how a company plans to create value by serving its customers.

A business model describes-what is the product/services, who will buy it? Why they will buy it? And how they will buy it? In this context a business model is defined as a summation of core business decision and trade- offs employed by a company to earn the profit.

These business decisions and trade-offs falls into four groups-revenue sources, key expenses, investment size and critical success factors.

Key Expenses or Cost drivers--A cost driver is any factor that affects total costs. The Capital cost for CSC is the cost of equipment required for running a CSC while variable and fixed cost are comes under operational cost.

Revenue sources--CSC business model consist following broad revenue sources-government to citizen services (G2C), Business to citizen services (B2C), Business to business services (B2B) and Non networked services.

VLEs are generating revenue through these sources on different revenue models such as-membership/subscription, volume/unit based, transaction fee and advertising

Framework for analysing a Business Model of CSC : Cost frame work of CSC

Capital cost Fixed cost Variable costEquipment Cost(Rs.) Item Cost(Rs.) Item Cost(Rs.)

Two P.C.+O.S. 44,000 Capital cost recovery EMI+12% Interest for four year

Connectivity charges

SWAN Annual charges

Inkjet printer 7,000 Hardware maintenance(p.a.) 10% of asset value Subscription charges

100 per subscription

Dot matrix printer 7,500 Hardware Insurance 1% of asset value Electricity charges

800

Digital camera 7,000 Training(per VLE)p.a. 2,500 Generator cost

13 per hour

TV+VCD Player 6,000 Man power cost(per month) 1,500    

Generator(750VA) 25,000 Monthly fee to SCA 500    UPS(500VA) 2,600 Rent for premises per month 1,000    

Wireless equipment 25,000 Business promotion(per month)

500    

IT Software 2,000 Travelling cost(per month) 500    

Furniture & fixture 15,000Contingency/Miscellaneous 1,400

Phone line 1,500    Others 9,400    Total 1,47,000

Framework for analysing a business model of CSC

Investment size-- It is defined as-maximum investment is the amount of cash required before a company achieves positive cash flow

The total investment size of a business model is depends on several factors including-- company’s revenue model, cost drivers and critical success factors.

Investment size of CSC is the sum of capital, variable and fixed cost .

A cash flow diagram provides the means for capturing and summarizing information relating to the cash requirement of a business model.

Critical Success Factor--The date of first cash flow and the date of cash breakeven directly proportional to critical success factors. A critical success factor is an operational factor or competency that a company must possess in order for it to be sustainable and profitability .

The sustainability and profitability of CSC’s business model depends on some key factors- selection of appropriate VLEs, selection of appropriate venue of CSC and catchment area of CSC, credibility of VLEs and CSC, adequate connectivity and consistent power supply, timely roll out of G2C and B2C services and their content in local language, capacity building of all stakeholders of CSC eco system, awareness in public about CSC and benefits of CSC offered services, role of government and attitude of government functionaries. (Explained in Challenges and Issues of CSC)

Cash Flow Diagram of CSC

Knowledge base business model of CSC

Knowledge base business model of CSC --

Main feature of this model are (e.g. -NASSCOM Foundation Mumbai(India) and an NGO Multipurpose Social Service Society trained 24 student for IT-BPO sector in Cuddalore near Pondicherry(India).

Make access to education; information and knowledge through ICT enable CSCs to rural people especially youth.

The CSC offered IT-Computer and English skill courses will transform the young rural population into skilled human resources for IT-BPO industry

. SCAs will play the role of driver in this business model. SCA will bags the IT/ITes contracts/business from domestic and offshore markets and then they sublet to CSC. These CSC will distribute work among IT and English educated rural youths. CSC will acts as coordinator between SCA and these rural youth.

This IT enable rural workforce is cheap in compare to urban based workforce in India. Indian IT/ITes services become cheap in compared to other TI/ITes providing countries in the world.

This lucrative business attracts more private investment in rural areas, other than CSCs. In future more and more IT infrastructure and parks will develop. In future IT/ITes industry will connected with most of rural households.

Rural youth and specially women who are engaged in agriculture but their productivity is insignificant, they can be successfully shifted in service sector.  

This business model of CSC enables the IT/ITeS industry to penetrate in rural area and generate wealth through creating new job opportunity for rural people. If income of rural people increases it leads towards building more disposable income in rural community that can be tapped by CSC for their sustainability and profitability.

Business model of Educational services Offered by CSC

Revenue sources Delivery channel

Business model Revenue model for SCA

Revenue model for VLEs

Payment mode

IT Training Offline/online Courses will be offered by computer training institutes with collaboration of SCA

Course fee Revenue share and commission

Course fee

Computer Education(class5to 10 student)

offline The CSC in conjunction with the local/national computer educational service provider would offer computer Education Programme to schoolchildren.

Subscription fees/Training fees

Subscription fees Monthly fees

English skill training

Offline/online VLE will be trained as a English Skills Programme facilitator and will train students in basic English Speaking and Writing Skills through a set of CDs, books and other training material.

Training Fees VLE is the Service Provider

Course fees

Conclusion-I

The CSC is a great effort by the government of India making government and commercial services accessible to rural people at their doorstep on an affordable prices with a vision to bridge urban-rural development

The goal of the CSC project is to empower the rural community and catalyse social change through modern technologies.

These CSCs will become a vehicle for rural inclusion and inclusive growth to unlock the potential of rural India.

Analysis of technological framework of CSC indicates need for improving connectivity and infrastructural facility on priority basis.

organisational cohesion and better coordination between SCA and government agencies like SDA is needed.

Success and sustainability of CSC is very much depends on selection of appropriate SCAs and VLEs Analysis of services framework suggest that delay in deployment of G2C services and road blocking

attitude of government functionaries are demotivating the VLEs that hampering the progress of CSC roll out

CSC scheme is facing major challenges like ----- lack of content in local language, lack of awareness about CSC in rural community, inadequate capacity building effort to enhance the efficiency of VLEs and government functionaries. These challenges must be addressed in an integrated manner.

Conclusion-II

Strategic analysis of CSC through SWOT gives a broad picture of internal and external potential and challenges that helps us to focus on some key issue like how to build disposable income in rural community and building market linkages through CSC offered services.

Critical analysis of existing business model of CSC is suggests that the some new model should also be adopted for sustainability and profitability of CSC.

This paper suggest a supplementary knowledge based business model of CSC on the basis of building a pool of skilled cyber work force in each village through CSC offered IT training and English skill courses.

On a driving seat SCAs bags the IT/ITeS business contracts from domestic and foreign market and execute the task through VLEs-rural cyber workforce channel at a cheaper cost.

So the benefits of outsourcing will trickle down in rural community that increase the disposable income of rural people and uplift their quality of life.

This strategy will bridge the urban-rural divide and India will able to achieve an inclusive growth.